Mario Monti’s race to have an emergency government in place by the weekend appeared assured of success today when Silvio Berlusconi’s anointed political heir said that parliament’s biggest grouping, the People of Freedom party (PDL), were behind him.

Angelino Alfano, the secretary of the PDL said after an hour-long meeting with Prime Minister-designate Mr Monti: “We think, in the light of events, that Professor Monti's bid to form a government will pan out.”

A sticking point appeared to be to Mr Monti's efforts to coax his choice of centre-left Democratic Party and centre-right PDL politicians to work together in a technocrat cabinet. But tonight, Mr Monti was said to be ready to announce his ministerial line up.

But another bleak day on the money markets, with shares falling and Italian borrowing costs surging once again, suggested that investors want to see action not words – and that Mr Monti, an academic and ex-EU commissioner, was in a race against time to start wielding the scalpel on Italy’s sclerotic economy. The spread between German and Italian 10-year borrowing costs passed the 7 per cent mark – a level that would in a short time bankrupt Italy, and probably cause the break-up of the Eurozone.

"For Italy, it’s the moment of truth,” said EU president Herman Van Rompuy, in a speech in Brussels in which he lauded his former colleague’s credentials for dragging Italy out of the debt-confidence mire.

Reports suggest that Mr Monti has already prepared a programme focusing on austerity while boosting growth and job prospects, particularly for young people. EU officials have indicated that they expect the new government's reforms to go beyond those passed this month by the Italian parliament.

Mr Monti has made it clear that he wants 18 months in power – the full span remaining to this parliament – in order to have the time and credibility to carry out the reforms.

Mr Alfano, the secretary of the party created by outgoing premier Silvio Berlusconi, did not comment today on Mr Monti’s desire to carry on until the spring of 2013, which some pundits interpreted as tacit approval. But it’s not just the centre-right that Mr Monti will have to keep on board as an unelected premier he prepares to steer cutbacks, plus tax and labour reforms through parliament. Many MPs in the opposition centre-left Democratic Party - the first major parliamentary group to get behind a Monti national unity government - may have a hard time stomaching the new free-marketer premier’s medicine for Italy.

In particular Mr Monti may have a fight on his hands reforming the labour laws that currently provide for miserable short-term contracts or jobs for life – but little in between.

His instinct to start selling off Italy’s treasure trove of state assets to make inroads in the €1.9trn debt mountain, and more importantly, boost long-term efficiency, will also ruffle feathers. It’s also likely he’ll try to reintroduce property tax, which was abolished by Mr Berlusconi, as a way to tap into the country’s vast private wealth, that is in contrast to its huge public debt.

Mr Monti's Bocconi University colleague, economics professor Francesco Giavazzi, told The Independent that he would like to see all of these policies introduced. But he added that Mr Monti would also have to take an axe to the undeserved privileges enjoyed by those in positions of power - particularly Italy's politicians, both national and local. “If not, the country might explode,” he said. “Do regional representatives really deserve pensions for life after one term in office?”